Families lose out when it comes to rent

There's a new kid on the block and it looks as if he's here to stay.

Fiona McPhilips
– 15 November 2012 04:00 PM

Well, at least until his lease expires. More and more Irish people are choosing the mobility and flexibility that comes with renting their homes instead of buying them. There has been an 84pc increase in private-sector rentals since 2006, with 18.5pc of the population now renting.

In Dublin, where the property crash has been most pronounced, that number is over 30pc. Our levels of home ownership are lower than the European average, which stands at 73.6pc compared to 69.7pc in Ireland.

Traditionally, the stereotypical renter has been a low earner -- young, studying or unemployed. But the new renters tend to be mortgageable; they could buy, but they choose to rent instead. They don't want to be tied down to a 30-year home loan or they fear that the housing market hasn't quite bottomed out. Instead, they want good-quality, family homes in well-established suburban locations.

"The problem is, the property market is not ready for this change, leading to a shortage of decent accommodation, especially for families," says Dr Lorcan Sirr, lecturer in real estate and construction economics at DIT.

Most landlords don't see the gap in the market for long-term family rentals, says Dr Sirr. "Until landlords start to recognise that there is a whole new market that they could make money out of, I don't think they're going to do a whole lot."

He says the market needs professional landlords who will apply the principles of commercial property investment to residential development. "Good accommodation means better tenants with more security of income."

Candid

However, until this sea change occurs, competition for family homes remains stiff. The latest Daft.ie rental report shows that the number of properties available to rent is falling, particularly in Dublin where supply is down 22pc. Rents in Dublin have also increased year-on-year in every quarter since the start of 2011.

My experience of looking for a four-bed family rental was not a pleasant one. As soon as we had a sale agreed on our house, the process of finding a long-term rental home began. The properties we viewed fell into two categories -- houses that were clean and spacious, in which we could imagine ourselves living, given a few compromises, and houses where we were looking for the candid camera.

These were cramped, dated, dirty and hugely overpriced. They also comprised about 90pc of available properties. The other 10pc had a queue of families at every viewing and were snapped up within days of being advertised.

Another major issue for us was the fact that most rental properties are offered fully furnished. We had a house full of furniture and, not only did we not want to pay for storage, it was our stuff and we wanted to use it.

Not possible, said every single landlord. One suggested we use one of the bedrooms to store our entire house-full of furniture. Another volunteered the garden shed.

When we did find a semi-suitable property, we thought we'd be canny and put in an offer just under the asking price, deposit available immediately. The estate agent called me back to say that they had already been offered the asking price and were only considering bids above it.

As our closing date approached, in a fit of panic, I decided to broaden our search area and bingo -- I found a large, unfurnished, four-bed house with a garden at a reasonable rent in a great residential area. We're still here. Feeling very lucky indeed.

We're not the only ones. Ita Burke Keaveney and her family have been renting for five years.

"We got to rent a house close to where we want and the size we need. This wouldn't be available to us financially to buy." Ita finds the main problem with renting is the lack of stability it affords them.

"There really is no security in a rental property as you never know when it might be sold."

Refurbish

Dr Sirr says that security of tenure is a massive issue for tenants. "The Residential Tenancies Act has too many get-outs for landlords who want to take possession of the property. To me, this is self-defeating. It is discouraging the very people that it should be encouraging, i.e, tenants who want to rent long-term."

The Residential Tenancies Act 2004 provides the periods of notice that must be given to tenants to vacate a property; this notice depends on the length of the tenancy.

After six months of a tenancy, a tenant becomes entitled to a Part 4 Tenancy and a landlord can only terminate the tenancy on specific grounds.

However, these grounds are wide-ranging and vague (for example, if the landlord wants to refurbish or needs the property for a family member).

This is clearly not conducive to a long-term rental market.

Unlike many, Emma [not her real name] has never seriously considered buying a house. "We wanted to spend our money on travelling instead. We were quite happy renting, we didn't really feel like we wanted a house."

Until recently, Emma and her family rented an apartment but as the kids got older, they decided to look for a house.

"A lot of the houses we looked at were very old, very untidy. I got the impression that people thought they could rent out a complete kip just because it had three bedrooms, as if nothing else mattered." As soon as Emma viewed her current house, she signed a year's lease straight away.

After three months, the landlord arrived at the house with a letter. "He said, 'Sorry folks, bad news, a family member needs the house'."

The letter gave them 28 days to vacate the property. Emma called the national housing charity, Threshold, which looked at the lease and told her she didn't have to leave until the end of the 12 months. The case has now been referred to the Private Residential Tenancies Board (PRTB).

Deirdre Murphy, of Threshold, advises tenants in this situation to look at the notice period given -- this must be in writing -- and make sure it is valid. She says that if you have signed a lease and there is no break clause, the landlord cannot ask you to leave before the end of the lease.

So what is the future for the rental market in Ireland?

Economist Ronan Lyons says: "Outside Ireland's main cities, rents have stopped falling in spite of conditions in the market, in particular, huge oversupply."

Ronan says this gives the Government a tough balancing act in the upcoming Budget. "Next year will see the end once and for all of bedsits in Ireland. This will push demand for one-beds but mostly where there is already little or no oversupply."

This means that some renters will be pushed further out of the cities. "This will put pressure on services like buses and if it's a longer-term phenomenon, things like schools."

A recent survey found 61pc of people renting would be happy to do so for the long term. As Dr Sirr says: "Domestic accommodation is somebody's home -- not a commodity."